QUOTE AND NEWS
NPR  Dec 6  Comment 
Judy Huth, the latest accuser of the 77-year-old comedian, says Cosby drugged and raped her in 1974 when she was only 15. Cosby's lawyer has called the claim "absolutely false."
New York Times  Dec 3  Comment 
The comedian Bill Cosby was sued Tuesday by a Southern California woman who says he molested her in a bedroom of the Playboy Mansion in Los Angeles around 1974 when she was 15.
Clusterstock  Dec 3  Comment 
More than 60 years after it was founded by Hugh Hefner, Playboy is working hard to remain successful and relevant by focusing on a key demographic: millennials. One key to this strategy is Cooper Hefner, the 23-year-old son of the company's...
Biomass Magazine  Nov 5  Comment 
Corbion Purac has announced plans to take the next step in the bioplastics value chain by becoming a polylactic acid (PLA) producer with the development of a proposed 75,000 ton-per-year plant in Thailand.
Clusterstock  Nov 5  Comment 
While most people associate the Playboy Mansion with scantily clad playmates and sex-fueled debauchery, it served as the childhood home for Hugh Hefner's sons. Now 23, Hefner's youngest son, Cooper, recounts his childhood spent in what many...
Clusterstock  Oct 17  Comment 
When you're the son of Playboy founder Hugh Hefner, you undoubtedly inherit a unique view of what life is all about. We caught up with Hefner's 23-year-old son Cooper, a recent graduate of Chapman University's film school. Cooper serves as a...
BusinessWeek  Oct 1  Comment 
Far from retreating, Hong Kong's protesters are digging in for the long haul—with one eye on the PLA
Times Online  Sep 30  Comment 
Johnson, the Playboy postie Before Twitter and sexting, men (in paisley pyjamas or not) had to have their rude images...




 

Playboy Enterprises (NYSE:PLA) is an adult media corporation that earns revenue from a diverse group of holdings; its businesses range from the world-renowned Playboy magazine to a licensing group that has managed to attach the Playboy name to everything from watches to the Palms Casino in Las Vegas. While the company's publishing and television businesses have been hit with declining revenues, corporate restructuring could allow Playboy to realize the earnings potential of the world's number one men's magazine. Furthermore, worldwide economic growth is changing the social values of more conservative societies around the world, creating new markets for Playboy's previously taboo products.

The company is also taking advantage of evolving media technologies like online video and smartphones to distribute its content and further expand its brand recognition, which helps boost its already highly profitable licensing division. While Playboy is technically a media company, its unique content separates it from traditional media and publishing conglomerates. At the same time, it isn't limited to pornographic material and, as such, doesn't exclusively compete in the adult entertainment market. Despite its niche position and highly visible brand name, Playboy is facing the same difficulties that plague both the traditional media and porn industries; as the Internet becomes more popular, the demand for print material (including the Playboy magazine) continues to decline. Additionally, the Internet has spurred the proliferation of free porn sites, which can steal business away from Playboy's subscription-based online offerings. The future of the company will hinge on its ability to adapt to these changing trends and adjust its operations accordingly.

Company Overview

Playboy Enterprises is an adult media and licensing company that has been crafting the lifestyle vision of the American male since 1953, when Hugh Hefner published the first magazine. As close to a family business as a publicly-traded company can get, Playboy is run by Christie Hefner; her father, the founder, is Chief Creative Officer. The company is now a multi-million dollar, international phenomenon; with television, radio, nightclubs, and resorts, the company is known across the world for its sexy, progressive portrayal of the American dream. To most people Playboy means one thing: sex. Playboy's history, public image, and product line are synonymous with sex and porn; its products reflect this image, an image that subjects the company to some unique forces that few other companies face.

Business Segments[1]

Playboy is known for many things, from the sexy, provocative magazine that mixes modern trends with racy photography to the iconic, smoking-jacket-clad founder who decided to live the lifestyle his magazine portrayed. The company began peddling Hefner's vision of the sophisticated alpha male through its magazine, but has since expanded into nearly every available platform:

  • Entertainment: Playboy TV has subscription-based television channels available in 70 countries on over 27 networks. 3,500 hours of original content are created each year. Its programming caters almost exclusively to men; the shows are reminiscent of MTV with one main exception; for the most part, the women are nude. Since the acquisition of ClubJenna Inc. made Playboy one of the nation's largest hardcore pornography producers, Playboy has also expanded its programming to include video-on-demand, as well as the all-porn Spice Network. Playboy Radio is broadcast over Sirius Satellite Radio; its content ranges from relationship advice to interviews with playmates, the ladies who appear in Playboy's products. The station, much like the magazine, attempts mix sophistication with eroticism. Playboy Wireless offers content that is downloadable to mobile devices, like cell phones and PDAs. Content includes videos, pictures, games, and ringtones, all with the Playboy theme; this service is offered in 30 territories. Playboy Online includes a broad range of web offerings, though, for the most part, it is a collection of
  • Print/Digital: Playboy magazine is a general-interest magazine, targeted to men. Playboy magazine includes interviews with high-profile political, business, entertainment and sports figures, pictorials of famous women, content by leading authors, and the work of photographers, writers and artists. Playboy magazine also features lifestyle articles on consumer electronics and other products, fashion and automobiles and covers the worlds of sports and entertainment. The magazine was once the keystone of the company's business, but due to the declining print publishing industry, the company has increased its focus on the digital realm with its various websites. Its free site Playboy.com offers the same content as its magazine and its subscription based sites are essentially adult websites with offerings ranging from softcore nudes and beyond.
  • Licensing: The Rabbit Head logo is one of the most recognizable symbols in the world; its powerful association with Playboy, and therefore with sex, sophistication, and glamorous living, makes it a powerful force in attracting sales. Playboy's licensing division essentially sells the use of the Playboy name, logo, and image, to other companies. Among the products not produced by Playboy that feature the Playboy logo, name, or other associations, are clothing lines, lifestyle and entertainment products, a nightclub and casino, and a mansion resort in Macao. While licensing isn't the largest part of the Playboy business, it is the most profitable and has grown tremendously over the past three years.

Business Growth

FY 2009 (ended December 31, 2009)[2]

  • Net revenue fell 17.7% to $240 million. Net sales fell in all three of the company's business segments, which the company attributes to the slow economy.
  • The company reported a net loss of $51 million an improvement over the net loss of $122 million in the prior year.

Trends and Forces

Shifting Values and Emerging Markets

The developing world has seen tremendous economic growth in the past few years; countries like China and India are great examples this. As formerly low-income countries develop and their citizens gain more spending power, the demand for luxury goods is increasing. All this amounts to one thing: a fantastic opportunity for Playboy. Playboy's influence on the consumerism and lifestyle choices of the United States is hard to ignore. Fifty years ago, when the bunny logo first showed itself, women asserting their sexuality was not nearly as accepted as it is today, and the average woman wouldn't have associated themselves with the Playboy image. Now the Playboy lifestyle has become more mainstream and it has penetrated American society. In many developing countries, the situation is reminiscent of the U.S. fifty years ago. Economies are developing and with them so are social norms. As progressive values begin to undermine the traditional, Playboy has an opportunity to accelerate consumerism in developing countries. By helping to push along the adoption of progressive values, the company can coax markets for its products into emerging out of the woodwork. The worldwide proliferation of Playboy's magazines and television networks, as well as the introduction of Playboy in India, a country notorious for its kiss- and sex-free Bollywood film industry, are clear indications of this potential.

Paper-to-Pixel

The print publishing industry has seen a drop in circulation; it appears that the Internet has replaced newspapers, pamphlets, and magazines, as the go-to source for news and information. This has been hurting the Playboy magazine, as can be seen by the diminishing gains the publishing department at Playboy has incurred over the past few years. The magazine, however, does bring benefits other than just revenue. It is a major driver of the Playboy brand name, and it is what brought the company to fame in the first place, making the brand a household name. Playboy Online is also a major brand driver; though revenues from Playboy Online are negligible, the website and its content push Playboy's sexy and sophisticated image in such a way that anything bearing the logo would be associated with the website. While magazine revenues might stagnate as they appear to have done with the website, both will remain very important to generating revenue from other segments of the company, especially in the high-margin licensing business.

Advancing Media

Playboy's use of rapidly advancing media technologies will be important to its future success as an entertainment company. The Internet, for example, has seen increasing technological gains; triple-play technology has the ability to bring voice, video, and data together to create comprehensive gaming and communications experience. Additionally, the Web 2.0 movement promises greater digital interactivity, advancing research, advertising, and entertainment. The greater penetration of wireless technologies like the iPhone in emerging markets is also creating new opportunities for Playboy to deliver content to a substantially larger customer base.

Competition

As one of the United States' major media companies, Playboy could be considered as competing with such major corporations as Time Warner, Vivendi, Sony, and News Corp. None of these are adult entertainment companies, however, which is why they aren't really competing against Playboy; the adult media market, thanks to government legislation and good parenting, is far removed from the general media market. In terms of Playboy magazine's editorial and non-pornographic material, magazines such as Esquire (owned by the Hearst Corporation), GQ (owned by Conde Nast Publications Inc.), and Maxim (Dennis Publishing, which owns the U.K. edition, sold the U.S. version to private equity firm Quadrangle Group earlier this year) all target a similar demographic. None of these companies are publicly held.

Adult Entertainment

Playboy's major competitors in the adult entertainment industry include New Frontier Media (NOOF), Private Media Group (PRVT), LFP Inc., Vivid Entertainment Group, and Penthouse Media Group, Inc. Of these companies, only New Frontier and Private Media are publicly traded, and none of them offer as diverse a product line as Playboy. Additionally, these companies' products are generally heavier on the "graphics" and lighter on the writing and other content that sets Playboy apart.

The Internet is for Porn

Playboy, however, faces increasing competition from a large number of small websites that offer similar content for free. Sites like AskMen.com offer the journalism of Playboy at no cost, and thousands of small, ad-funded sites offer free adult content without the inconvenience of subscriptions. Because of this, Playboy runs the risk of losing online revenues while simultaneously spending large amounts of money to maintain its website.

References

  1. PLA 2009 10-K pg. 1-11
  2. PLA 2009 10-K "Selected Financial Data" pg. 24
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